Economics 9708 · AS & A Level · Utility and rational consumer behaviour

Utility and rational consumer behaviour — practice question

A consumer purchases goods X and Y. The marginal utility of good X is above zero and decreasing. The consumer has reached the point at which the ratio of the marginal utilities of the two goods is the same as the ratio of their prices. What may be concluded from this information?

  • Athe consumer will continue to consume additional units of X until marginal utility is zero
  • Bthe consumer will purchase more of X if the price of Y rises
  • Ctotal utility will be negative on the additional unit of X consumed
  • Dtotal utility will be rising at an increasing rate on the additional unit of X consumed

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